Good news for small businesses in South Africa
The African Development Bank has invested $332 million, approximately R5.4 billion, in a Standard Bank capital markets security to finance loans to small and medium-sized enterprises (SMEs).
The Bank has also provided R16 million ($1 million) as a Technical Assistance grant to the Affirmative Finance Action for Women in Africa (AFAWA) programme to address challenges faced by female entrepreneurs.
The facility will be used as a Flac instrument, a new class of debt introduced by the South African Reserve Bank in January 2026 as part of the country’s phased approach to implementing a bank resolution regime.
A FLAC instrument (Loss-Absorbing Capital/Capacity) is a debt security used by large banks that absorbs financial losses if a bank fails. This can protect taxpayers from having to pay for bank bailouts.
The security, issued as a social bond, is listed on the Johannesburg Stock Exchange (JSE), which makes it the first Flac instrument by Standard Bank on the Exchange, that targets the social use of its proceeds.
“This investment reflects the African Development Bank’s commitment to strengthening Africa’s financial architecture while directing long-term capital to where it is needed most,” said African Development Bank Director General for Southern Africa and Country Manager for South Africa Kennedy Mbekeani.
“By partnering with Standard Bank Group, we are simultaneously helping to build a more resilient banking system and supporting the SMEs that drive jobs and inclusive growth,” said Mbekeani.
Standard Bank said it has allocated the full R5.4 billion to SMEs, including women-led businesses, to address the gender financing gap still evident in South Africa’s small business sector.
“We are delighted to close another landmark transaction with the AfDB, following the successful 2024 transactions,” said Standard Bank Group Chief Executive of Corporate and Investment Banking Luvuyo Masinda.
First Standard Bank Flac instrument on the JSE
Masinda said that the social FLAC issuance will enable the group to deliver on Standard Bank Group’s purpose.
“SMEs are a critical driver of economic growth and job creation. They are the backbone of South Africa’s economy, with approximately 3.2 million SMEs accounting for 60% of jobs,” said Masinda.
Masinda explained that Standard Bank’s main objective is to ensure these businesses have the support and access to finance they need.
Standard Bank Chief Executive of Business and Commercial Banking Bill Blackie said that this deal, together with its partnership with the AfDB, strengthens its ability to back the businesses that underpin inclusive economic growth.
“We are especially excited about the technical assistance grant, which will allow us to fund key initiatives that deliver direct, tangible benefits to women-led SMEs,” said Blackie.
Standard Bank announced that a recent transaction strengthens its long-standing partnership with the African Development Bank, which dates back to 2008.
This development follows the Bank’s approval in November 2024 of a ZAR 3.6 billion subordinated debt facility for Standard Bank Group, as well as a $200 million risk participation agreement with Standard Bank of South Africa, aimed at supporting trade finance across Africa.
As of December 2025, Standard Bank Group reported that it had fully used the 2024 facility, assisting 5,425 small and medium-sized enterprises (SMEs) and surpassing its initial goal of 4,000.
The loans were primarily directed towards businesses in sectors such as agriculture, retail, wholesale trade, and manufacturing.
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